Air India privatisation: Tata Sons is all set to get Maharaja, according to reports. The conglomerate has won the bid for national carrier Air India, Bloomberg reported. A panel of ministers has accepted the conglomerate’s proposal to take over the airline, the report said. An official announcement is expected soon, it further mentioned.
While Tatas have the winning bid, secretary of Department of Investment and Public Asset Management (DIPAM) said, “Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken."
The government expediting the divestment process of Air India, wants to handover the carrier to its owned by the end of December this year, the reports suggested. The formal announcement on the same is expected to be made after the meeting of committee of ministers led by home minister Amit Shah. Tata Group emerged as the leading contender for taking control over Air India, according to reports. If this happens, Air India will be back in the hands of its owners after a hiatus of 67 years.
Tata’s association with Air India dates back to 1932, when Tata Group founded Air India. However, the government nationalised the airline in 1953. According to several media reports, the government had begun evaluation of financial bids received from Tata Group and SpiceJet founder for the acquisition of Air India. This marked, a huge stride made in the direction of national carrier privatization. The reserve price for Air India Sale is fixed after the presentation by valuation advisor and transaction advisor this week.
With the aim of achieving almost Rs 1.75 lakh crore divestment target announced by the government in the Union Budget of 2021-2020, the government is sticking to the timeline and has said that the privatisation of the national carrier will be completed in FY22.
Last year in December, when the government invited Expression of Interests for the divestment process of Air India, four bidders submitted the EOI, Tata Sons, another consortium of some AI employees and Interups, and Spicejet were the four names in the fray. Now only the Tata Group and Spicejet CEO Ajay Singh are in the race to take over India’s beleaguered national carrier Air India.
The Union government will select the winner in Air India’s disinvestment in about three weeks. The government is selling off its 100 per cent stake in the state-owned airline that has been incurring losses since 2007. The government, as part of the exercise, also plans to sell its entire stake in Air India Express and 50 per cent stake in Air India SATS Airport Services Private Ltd.
The Tatas currently have a stake in two airlines—- AirAsia India, which is a low-cost carrier and full service carrier Vistara, If Tatas will get control of Air India then theAir India will be back in the hands of its founders. Tatas set up Tata Airlines in 1932, which was later in 1946 renamed as Air India. The government took control of the airline in 1953 but JRD Tata continued to be its chairman till 1977.
According to reports, Air India will pass into the hands of its prospective owner with a debt of Rs 23,000 crore. The remaining debt of the company will be taken up by the government-owned Air India Asset Holdings Ltd (AIAHL) — which is a new entity that will hold the carrier’s assets, such as the Air India building in Mumbai, Airlines House in Delhi, etc.
Whoever will get control over Air India, will automatically get control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas. In addition to this, the bidder would also get 100 per cent of the low-cost arm Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports.